After Kendall Jenner Ad Debacle, What's Next for Pepsi?

Pepsi has long presented itself as the hip, fashion-forward, culturally aware, live-for-the-moment alternative to its bigger, more classic rival Coca-Cola. Coke is timeless and Pepsi is timely, Pepsi global executive Brad Jakeman told Ad Age in 2012, summarizing months of research that led to the "Live For Now" campaign that Pepsi broke that year.

But now Pepsi is reeling from criticism that strikes at the heart of the brand image its marketers have carefully crafted, as a result of one single global ad that never even made it to TV in the U.S. The spot, as everyone knows by now, starred supermodel and reality TV star Kendall Jenner joining a nondescript peace/protest march. Pepsi pulled the ad Wednesday morning amid withering criticism that it co-opted protest movements such as Black Lives Matter for commercial gain.

Pepsi, a brand that has sought to create culture, is now being mocked as tone-deaf and culturally unaware. The biggest blow might have come from Bernice A. King, daughter of Martin Luther King Jr., who ripped the brand Wednesday with a sarcastic tweet stating "If only Daddy would have known about the power of #Pepsi" -- a reference to a scene in the ad in which Ms. Jenner hands a policeman a Pepsi, eliciting a smile from him and cheers from the protest marchers.

Pepsi was "trying to project a global message of unity, peace and understanding," it said in a statement apologizing. "Clearly we missed the mark." But how long will the miss hurt Pepsi's brand and what, if anything, can it do to recover?

In a lot cases, ad flops such as this one are buried by the time the next news cycle heats up, making tomorrow's brand disaster tomorrow's forgotten flare-up. But the backlash against Pepsi was so fierce and widespread that the marketing mishap could linger, for a short while at a minimum.

Indeed, there is speculation among financial analysts that Pepsi will feel at least some hurt where it matters most: sales.

"There are some concerns on impact to the brand and volumes," said Robert Ottenstein, senior managing director of global beverages for Evercore ISI, an investment advisory firm that covers PepsiCo, in an email.

The media's tendency to keep moving will minimize the pain, according to Rick Shea, a former packaged food marketing executive and president of Shea Food Consultants. He predicted a negative sales impact but suggested it would be "very short-lived from a volume standpoint."

"Consumers are notoriously busy and they tend to move on very quickly and forget things as long as the news media does," Mr. Shea added.

"This was a massive mistake, and it may have a big impact on the brand managers, but I don't think it will have a lasting effect on the brand," Sanford C. Bernstein analyst Ali Dibad said in an email interview. "Unfortunately, we have seen many mistakes by Pepsi in beverages recently like the reformulation in diets, the new packaging in snacks, and this. Sometimes it's just better not to try."

PepsiCo declined to comment beyond its apology yesterday.

Even as the company's flagship brand tries to turn the page, however, the ill-fated ad might not go away so easily. Here's a scary thought for the marketer: "Saturday Night Live" returns with a new episode on Saturday, and there's a good chance Pepsi will be mocked in some way.

"The 'SNL' factor is a big one," said an executive at an ad agency that has worked on beverage brands who requested anonymity in order to speak freely. "It has just become such an important force in the zeitgeist."

The agency executive suggested that Pepsi go further than making one single apology. Taking the ad down is "not enough," this person said, suggesting that PepsiCo might even consider "putting a head on the chopping block."

"You've got to show that you are not just doing this because people are complaining, but because you made a questionable choice -- just owning it," the executive said.

Where it gets complicated is that the spot was overseen by PepsiCo's in-house content creation arm, Creators League Studio, which is overseen by Mr. Jakeman, president of PepsiCo's global beverage group, and Kristin Patrick, senior VP-global brand development. So the recourse of firing an external agency is not available.

Mr. Jakeman has been a fierce critic of external agencies. In a fiery speech at an industry conference in 2015 he questioned the diversity level of outside shops, saying "innovation and disruption does not come from homogeneous groups of people."

Kendall Jenner in the ad Credit: Pepsi

But now it is Pepsi's internal agency that is coming under scrutiny. The ad's execution has been widely eviscerated, with critics mocking every little detail, like the color coordinated signs carried by marchers, including one that meekly says "Join the conversation." The casting of Ms. Jenner is also in the crosshairs. "Using a wealthy, white model with no history of civic concern to 'save the day' … what?" said Kit Yarrow, a consumer psychologist and author of "Decoding the New Consumer Mind," in an email interview. "There are so very many simply wrong aspects to the ad."

"I'd normally recommend an apology that includes an explanation of how they got it so very insultingly wrong -- but what could they say?" Ms. Yarrow added. "Just what they've already said -- 'we didn't mean to…' Bah. There really isn't anything they can say to explain why the ad that was supposed to show how connected and central they are to our culture said exactly the opposite."

Bonin Bough, who was PepsiCo's senior global director of digital and social media for more than three years until 2012, suggested that Pepsi have a dialogue about issues raised by the reaction to the ad with consumers via social media. "It gives you a chance to explain and provide context in terms of what actually happened," he said in an interview.

On Wednesday Pepsi drew 1.25 million mentions on on Twitter, Facebook and Instagram, with 58.6% of them negative, according to social media monitoring company Brandwatch.

sentiment by day | Pepsi

Mar 30, 2017 - Apr 06, 2017

Source: Brandwatch

Mr. Bough came to Pepsi's defense, noting that diversity is a top priority of executives, including Mr. Jakeman and CEO Indra Nooyi. The ad's intent, Mr. Bough suggested, was not to make light of protest movements, but to use Pepsi's size and scale to shine a light on movements and "have a positive impact in the world."

Bonin Bough.

He noted Pepsi's track record of participating in cultural conversations. He referenced, for instance, a 2009 campaign called "Dear Mr. President," which asked people to upload personalized videos that served as an open letter to then-newly elected President Obama on how to improve the country.

But the backlash against the Kendall Jenner ad might cause some soul-searching for brands and ad agencies about when, if at all, to weigh in on current events, especially those with a political tint. Trying to break through by plugging into topical conversations has become more popular as fewer people see traditional 30-second ads on TV. The usual execution is to deliver an ultimately unifying message in hopes of linking the brand to positive emotions.

Consider Cadillac, which ran an ad during the Oscars that weaved in historical footage of actual street protests with scenes of individual acts, like a black man hugging a white police officer. The commercial attempted to dispel the notion that America is a nation divided.

But America is divided politically. So some experts say mass-marketed brands -- which must appeal to Democrats, Republicans and everyone in between -- should use caution when attempting to get topical.

"Brands really aren't responsible for social change," Mr. Shea said.

"They are responsible for selling product and providing an image of the brand that serves a purpose, serves a benefit," he added. "It's very dangerous territory when you get into any of these issues that are in my mind 50-50."

Pepsi, he said, is "obviously a mass brand that appeals to all consumers." In the wake of the ad's backlash, "the best thing they can do at this point is probably nothing," he added. "It was a marketing blunder that is better left quiet. They've apologized for it. They've said they've pulled the ad. What more can they say?"

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E.J. Schultz

E.J. Schultz is the Chicago Bureau Chief at Advertising Age and covers beverage, automotive and sports marketing. He is a former reporter for McClatchy newspapers, including the Fresno Bee, where he covered business and state government and politics, and the Island Packet in South Carolina. His journalism awards include a 2012 Jesse H. Neal National Business Journalism Award for best range of work by a single author and a 2011 Best in Business award for a feature story from the Society of American Business Editors and Writers. A native of Cincinnati, Mr. Schultz has an economics degree from Xavier University and a masters in journalism from Northwestern University.